For most of my career, I worked for municipalities such as North York, Toronto and York Region. I understand that in Ontario, this level of government only has three primary sources of revenue: property taxes, user fees and development charges.

The problem today is that the proportion of revenue from each of these sources has become increasingly unbalanced. Development charges are a tax on new home buyers and the money collected is subsidizing amounts that could be coming from other revenue sources.

My column last week explained that development charges are funds used by municipalities to pay for new infrastructure like roads, transit, sewer and water pipes, parks and community centres.

When a building permit is issued by a municipality for new homes and employment spaces, the charges are collected from the development industry. Ultimately, development charges are paid by the new home buyers and businesses, and as the charges increase, affordability across the GTA decreases.

We recently studied the effect of government fees and charges on the cost of new homes in six GTA municipalities. In the municipalities we looked at, development charges are the most significant government charge on new homes and since 2004, development charges had increased between 143 and 357 per cent.

Property taxes, however, have increased nominally over the years and, in some municipalities, not at all.

According to the City of Toronto’s release about its 2013 property tax increase, “the 2 per cent residential property tax increase translates to an increase of $62.08 for the average residential household assessed at $474,368 in 2013, with the final 2013 municipal taxes on a typical home being $2,532.”

In 2013, the development charge on a newly-built home in the City of Toronto ranges from $8,356 on a one-bedroom or bachelor apartment to $19,412 on a single- or semi-detached home. If these rates increase as proposed when City Council’s executive committee votes on September 24, the rates will range from $12,192 to $28,435 as of February 2014.

Is it fair that new home buyers in the GTA are the only ones disproportionately paying for new and upgraded infrastructure?

I don’t think it’s fair.

New home buyers are taking out mortgages and the ever-increasing development charges are adding thousands of dollars to their principal, and ultimately their interest payments. This is especially unfair when you consider that all residents will enjoy the new or upgraded roads, transit lines, sewer and water systems and parks that come with the development of new communities for years well beyond the life of those mortgages.

In Toronto specifically, there is existing infrastructure. When new development comes to a neighbourhood, that infrastructure is upgraded because for the most part, it is old and needs replacing.

Crumbling infrastructure needs to be replaced and new home buyers will continue to pay their fair share, but this next generation of homeowners should not have the heaviest burden of carrying the costs of the infrastructure deficit left by generations past.

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